Ups and downs
Even if they stand to gain less from the rebound in the market, other automakers are also coping better. After losses executives said were in the hundreds of millions in the past few years, Volkswagen Group expects the VW brand will have finally broken even last year, in part because of the ruble's recovery.
IHS's Hristova is counting on VW's smaller German rival, Opel, to return with models such as the Crossland X and Grandland X crossovers, which share their platforms with vehicles from new owner PSA Group. Opel CEO Michael Lohscheller didn't rule out a return to Russia for his struggling carmaker.
GM might one day do the same, Hristova said, even if it may take many years before the U.S. carmaker can rebuild trust among dealers angered by its abrupt decision to pull out of the market in 2015. GM does retain a presence in Russia, though, via a minority stake in a joint venture in Uzbekistan that rebadges Chevrolets for tariff-free export to Russia under the newly created Ravon brand.
The big mystery in Russia has been Ford's failure to gain traction. Despite a joint venture with local partner Sollers and a local manufacturing base that includes three car assembly plants in Russia, Ford has struggled. Its market position went from third in 2009 to 10th today as sales of the once-popular Focus compact tumbled. "The Focus was once the Russian national car, but Ford was too late with B-segment [subcompact] cars, and this niche was taken up by the Hyundai Solaris, Kia Rio and Lada Vesta," IHS's Hristova said.
During the crisis, Ford Sollers was forced to make "severe and aggressive" cost cuts in its factories, including firing staff, its CEO, Adil Shirinov, told Automotive News Europe. Now Ford Sollers is rehiring staff as sales of its SUVs and Transit van climb. Ford will be profitable again in Russia this year, Shirinov said. He plans to overtake local automaker GAZ to become the leading van maker in the country, up from No. 2 now, in "one to two years," he said. He also said it is crucial for Ford to get back into the top five in the country's vehicle sales. "Otherwise, we won't exist," Shirinov said.
The road to reach this point was anything but smooth for automakers. After burning through much of its foreign exchange reserves to support the ruble amid economic sanctions and plunging oil prices, Russia's central bank eventually had to let the currency float freely at the end of 2014. The subsequent sharp depreciation in the currency forced Mazda to hike prices of cars such as the CX-5 multiple times and by almost 50 percent in total – nothing unusual at the time, Mazda Russia boss Schreiber said.
Highly attuned to financial developments, Russians panicked early on and consumer confidence was "completely shattered," he said. Even today, many still shift their money between two to three different bank accounts denominated in various currencies to protect their savings from another ruble plunge. Leading indicators suggest the economy has since adapted to a permanently lower price for oil and gas, Russia’s most vital exports. Although it was painful at first, a freely traded ruble has made the country more resilient over the long term. "The Russians have been preparing for that for many years, but it is always a dangerous step," Schreiber said. "Under the surface, there are real fundamental changes in government and monetary policy that were forced by circumstances."
He now believes he can at least double his dealers' throughput in the next three years. With the newfound stability symbolized most by the low inflation and steady ruble exchange rate, the decision Mazda made to invest in a new engine plant in Vladivostok, eastern Russia, looks like it will pay off handsomely for Schreiber. It's yet another sign that Russia's boom-to-bust rhythm might finally be over.
Nick Gibbs and Douglas A. Bolduc contributed to this report